India should levy a tax of 10 percent on crude palm oil,
Dorab Mistry, director at Godrej International Ltd., said in New
Delhi today. Palm oil comprises almost 80 percent of India’s
cooking-oil imports.

Palm oil, used in everything from biofuels to candy to
noodles, has fallen 21 percent this year as inventories surge in
Indonesia and Malaysia, which account for 87 percent of world
supply, and a global economic slowdown curbs demand. The plunge
may cut revenues for producers including Sime Darby Bhd. and IOI
Corp. and cap increases in food costs.

“The government should impose a duty on imports of crude
palm oil to protect farmers and use the money in long-term
development of oilseed cultivation,” said Davish Jain, managing
director of Prestige Group of Industries, one of India’s biggest
processors of soybean and exporters of soybean meal. “Unbridled
imports would be counter-productive for the growth of indigenous
oilseed production.”

Palm oil for January delivery dropped 1.6 percent to 2,496
ringgit ($817) a metric ton on the Malaysia Derivatives Exchange
in Kuala Lumpur on Nov. 2. Inventories jumped to an all-time
high of 2.48 million tons in September, while output gained to 2
million tons, according to the Malaysian Palm Oil Board.

Optimistic Scenario

Cooking-oil imports by India, the second-largest buyer, are
set to surpass 10 million tons for the first time after dry
weather damaged India’s oilseed crops and as demand climbs, GG
Patel & Nikhil Research Co. Managing Partner Govindlal G. Patel
said in September. Purchases may gain 5.4 percent to 10.3
million tons in the year ending Oct. 31 from about 9.78 million
tons a year earlier, said Patel, who’s traded cooking oils for
more than three decades.

Mistry outlined what he described as an optimistic scenario
for an importing nation in 2013.

Indonesia and Malaysia will have record stockpiles of palm
oil at the beginning of next year, while production of soybeans
will climb in the first quarter of 2013 in South America along
with excellent harvests of sunflower in Argentina and mustard in
India, said Mistry, who has traded palm oil for 35 years. This
may be followed by a switch in some plantings from corn to
soybeans in the U.S., he said.